(REIT) Financial Report for the Fiscal Period Ended August 2019
REIT Securities Issuer:
TSE Code:
Representative:

SANKEI REAL ESTATE Inc.
2972
Yuichi Ota, Executive Director

Listing:
URL:

Asset Management Company:
Representative:
Contact:

Sankei Building Asset Management Co., Ltd.
Yuichi Ota, President and Chief Executive Officer
Atsushi Mukai, Director and Chief Finance & IR Officer
TEL: +81-3-5542-1316

October 17, 2019
Tokyo Stock Exchange
https://www.s-reit.co.jp/

Scheduled date of submission of semiannual securities report:
Scheduled date of commencement of distribution payment:

November 27, 2019
November 20, 2019

Preparation of supplementary financial results briefing materials:
Holding of financial results briefing session:

Yes
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for the Fiscal Period Ended August 2019 (from November 19, 2018 to August 31, 2019)(1) Results of Operations(% figures are the rate of period-on-period increase (decrease))
Operating revenue
Operating profit
Ordinary profit
Profitmillion yen%
million yen%
million yen%
million yen%
Fiscal period
1,157
699
336
335
ended Aug. 2019yen%

Ratio of ordinary profit tototal assets
%

2,312

1.5

0.7

Earnings per unit
Fiscal period
ended Aug. 2019

Return on equity

Ratio of ordinary profit tooperating revenue%
29.1(Note 1) At SANKEI REAL ESTATE Inc. (hereinafter, “SANKEI REAL ESTATE”), the accounting period of the fiscal period ended August 2019 is a period of 286 days
from November 19, 2018 to August 31, 2019, but the number of days of the actual asset management period is a period of 173 days from March 12,2019.
(Note 2) Earnings per unit is calculated by dividing profit by the daily weighted average number of investment units (144,970 units). In addition, earnings perunit when calculated based on the daily weighted average number of investment units with the date of commencement of actual management(March 12, 2019), deemed as the beginning of the fiscal period (237,695 units) is 1,410 yen.
(Note 3) Return on equity and ratio of ordinary profit to total assets are calculated by using the average of equity and average of total assets as of the date ofcommencement of the actual asset management period (March 12, 2019), and as of August 31, 2019.
(Note 4) Percentage figures for operating revenue, operating profit, ordinary profit and profit are the rate of period-on-period increase (decrease), but are notapplicable for the fiscal period ended August 2019, because it is the 1st fiscal period.

(2) Distribution
Distribution per unit
Total distribution
Distribution(excluding distribution (excluding distribution in excess of earnings
in excess of earnings) in excess of earnings)
per unit
yenmillion yen
yen

Total distribution
in excess of earnings

Payout ratio

Ratio of distribution to
net assets

million yen%%
Fiscal period
1,399
335
100.0
1.5
ended Aug. 2019
(Note 1) Due to issuance of new investment units during the fiscal period resulting in change in the number of investment units during the fiscal period, payout
ratio is calculated by the following formula and rounded to one decimal place:
Payout ratio = Total distribution (excluding distribution in excess of earnings) ÷ Profit × 100(Note 2) Ratio of distribution to net assets is calculated based on the weighted average of net assets per unit with the date of commencement of the actual
asset management period (March 12, 2019), deemed as the beginning of the fiscal period.

(3) Financial Position

Fiscal period
ended Aug. 2019

Total assets
million yen

Net assets
million yen

48,71823,460Cash flows fromoperating activities
million yen

Cash flows frominvesting activities
million yen

201(42,109)

Equity ratio%

Net assets per unit
yen

48.2

97,913(4) Cash Flows

Fiscal period
ended Aug. 2019

Cash flows from
Cash and cash equivalents
financing activities
at end of period
million yen
million yen
45,3393,430

2. Operating Forecasts for the Fiscal Period Ending February 2020 (from September 1, 2019 to February 29, 2020) andOperating Forecasts for the Fiscal Period Ending August 2020 (from March 1, 2020 to August 31, 2020)(% figures are the rate of period-on-period increase (decrease))
Operating revenue
million yen
Fiscal period
ending Feb. 2020
Fiscal period
ending Aug. 2020

Operating profit% million yen

Ordinary profit% million yen

Profit% million yen

Distribution per unit
Distribution(excluding distribution in excess of earnings
in excess of earnings)
per unit
%
yen
yen

1,951

68.6

1,100

57.4

960

185.7

959

186.3

2,689

-

2,005

2.8

928

(15.6)

842(12.3)

841(12.3)

2,358-(Reference) Forecast earnings per unit (Forecast profit ÷ Forecast total number of investment units issued and outstanding at end of period)
Fiscal period ending February 2020: 2,689 yen
Fiscal period ending August 2020: 2,358 yen(Note)

Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast total number of investment units issued andoutstanding as of the date of this document of 356,800 units.

* Other(1) Changes in accounting policies, changes in accounting estimates, and retrospective restatements
i. Changes in accounting policies accompanying amendments to accounting standards, etc.: None
ii. Changes in accounting policies other than i.:Noneiii. Changes in accounting estimates:
None
iv. Retrospective restatements:
None(2) Total number of investment units issued and outstandingi.
Total number of investment units issued and outstanding(including treasury investment units) at end of period
ii. Number of treasury investment units at end of period(Note)

Fiscal period ended Aug. 2019239,600 units

Fiscal period ended Aug. 2019

0 units

For the number of investment units serving as the basis for calculation of earnings per unit, please refer to “Notes on Per Unit Information” on page 21.

* Financial reports are exempt from audits by certified public accountants or audit corporations.
* Matters of special note
The operating forecasts and other forward-looking statements contained in this document are based on information currently
available to and certain assumptions deemed reasonable by SANKEI REAL ESTATE. Accordingly, the actual results of operations, etc.
may differ materially due to various factors. In addition, the forecasts are not a guarantee of the amount of distribution. For theassumptions underlying the operating forecasts, matters of note in the use of the operating forecasts, etc., please refer to“Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2020 (from September 1, 2019 to February
29, 2020) and Fiscal Period Ending August 2020 (from March 1, 2020 to August 31, 2020)” on page 6.

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
Table of Contents
1. Management Status(1) Management Status

2(2) Investment Risks

7

2. Financial Statements(1) Balance Sheet

8(2) Statement of Income

10(3) Statement of Unitholders’ Equity

11(4) Statement of Cash Distribution

12(5) Statement of Cash Flows

13(6) Notes on the Going Concern Assumption

14(7) Notes on Matters Concerning Significant Accounting Policies

14(8) Notes to the Financial Statements

15(9) Changes in Total Number of Investment Units Issued and Outstanding22

3. Reference Information(1) Information on Price of Assets under Management, Etc.

23(2) Capital Expenditures

27

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1

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019

1. Management Status(1) Management Status(Overview of the Fiscal Period under Review)i.

Brief History of the Investment Corporation
SANKEI REAL ESTATE was incorporated under the Act on Investment Trusts and Investment Corporations (Act No. 198 of1951, as amended; hereinafter, the “Investment Trusts Act”) with Sankei Building Asset Management Co., Ltd.
(hereinafter, the “Asset Management Company”) as the organizer and investments in capital of 100 million yen (1,000
units) on November 19, 2018, and completed the registration with the Kanto Local Finance Bureau pursuant to Article
187 of the Investment Trusts Act on December 17, 2018 (Registration No. 140 with the Director-General of the Kanto
Local Finance Bureau). Later, SANKEI REAL ESTATE implemented an issuance of new investment units through public
offering (227,238 units) with March 11, 2019, as the payment due date, and listed on the Real Estate Investment Trust
Securities Market of Tokyo Stock Exchange, Inc. (hereinafter, “Tokyo Stock Exchange”) on March 12, 2019 (TSE code:2972). In addition, the abovementioned capital increase through public offering was accompanied by an issuance of new
investment units through third-party allotment (11,362 units) with April 10, 2019, as the payment due date. As a result,as of the last day of the fiscal period under review (August 31, 2019), total number of investment units issued andoutstanding was 239,600 units.

ii.

Management Environment
In the fiscal period under review (fiscal period ended August 2019), the Japanese economy showed signs of cautiousness
in corporate business sentiment, but continued improvement in the employment and income situation, private
consumption and business fixed investment being on an increasing trend and other factors led to a strong showing. On
the other hand, the environment is one that calls for attention to be given to the uncertainties over overseas economic
trends and policies, such as trade issues between the U.S. and China, slowdown in the Chinese economy and Brexit
issues, and the effects of financial and capital market fluctuations.
Under such economic circumstances, in terms of the office building market, which SANKEI REAL ESTATE sets as theprimary investment target, corporate relocations, office environment improvements and other resilient demand led tovacancy rate hovering at a low level and rent continuing to be on the rise in Tokyo and Osaka, where SANKEI REALESTATE’s portfolio assets are located. Meanwhile, in terms of the hotel market, which constitutes sub assets, demand forhotel guest rooms was strong due to year-on-year increase in the monthly number of international visitors to Japan up
to July 2019 and other increases (according to the Japan National Tourism Organization).

iii.

Management Performance
SANKEI REAL ESTATE commenced management with the acquisition of the 8 properties in the portfolio as of the last dayof the fiscal period under review for a total of 43,395 million yen on March 12, 2019. Accordingly, the fiscal period underreview’s actual asset management period was a period of 173 days from March 12, 2019 to August 31, 2019.
Furthermore, as of the last day of the fiscal period under review, the 8 properties in the portfolio had total leasable areaof 33,097.98 m2, total leased area of 33,093.49 m2 and occupancy rate of 100.0% (Note).
(Note)

iv.

“Occupancy rate” is the ratio of total leased area to total leasable area, rounded to one decimal place. Moreover, for total leasable area
and total leased area, each total is calculated based on the area corresponding to SANKEI REAL ESTATE’s ownership interest in eachportfolio property.

Overview of Fund Procurement(Equity Financing)In the fiscal period under review, with the new listing on Tokyo Stock Exchange, an issuance of new investment units
through public offering (227,238 units) with March 11, 2019, as the payment due date was implemented, and 21,928
million yen in funds was procured. In addition, the abovementioned capital increase through public offering was
accompanied by an issuance of new investment units through third-party allotment (11,362 units) with April 10, 2019, as
the payment due date, and 1,096 million yen in funds was procured. As a result, as of the last day of the fiscal period
under review, unitholders’ capital was 23,124 million yen.
(Debt Financing)In the fiscal period under review, 23,410 million yen was borrowed from Mizuho Bank, Ltd., Sumitomo Mitsui Banking
Corporation, Development Bank of Japan Inc., Mizuho Trust & Banking Co., Ltd., Sumitomo Mitsui Trust Bank, Limited,
Shinsei Bank, Limited and Resona Bank, Limited. through a loan syndicate with Mizuho Bank, Ltd. and Sumitomo Mitsui
Banking Corporation as the arrangers on March 12, 2019, in conjunction with the acquisition of properties. In addition,
early repayment of 1,096 million yen was made on April 22, 2019, using the proceeds from the issuance of new
investment units through third-party allotment as the funds for the repayment. As a result, as of the last day of the fiscal
period under review, the balance of borrowings outstanding was 22,313 million yen and the ratio of interest-bearing
liabilities to total assets (hereinafter, “LTV ratio”) was 45.8%.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019v.

Overview of Business Performance and Distribution
As a result of the management described above, business performance in the fiscal period under review was operating
revenue of 1,157 million yen, operating profit of 699 million yen, ordinary profit of 336 million yen and profit of 335
million yen. Concerning distribution, in accordance with SANKEI REAL ESTATE’s distribution policy (Article 36 of thearticles of incorporation), SANKEI REAL ESTATE intends to have the maximum amount of distribution of earnings included
in deductible expenses by application of special provisions for taxation on investment corporations (Article 67-15 of the
Act on Special Measures Concerning Taxation (Act No. 26 of 1957, as amended)). For the fiscal period under review, thedecision was made to distribute 335,200,400 yen, which is the entire amount of unappropriated retained earnings,
excluding fractions of distribution per unit of less than 1 yen. This resulted in distribution per unit of 1,399 yen.

(Outlook for the Next Fiscal Period)i.

General Management Outlook
The outlook for the Japanese economy is that, despite concerns over the impact of slowdown in overseas economies on
business fixed investment, improvement in the employment and income situation and a strong showing in corporate
business performance are expected to lead to moderate recovery continuing. On the other hand, uncertainties overoverseas economic trends and policies, such as trade issues between the U.S. and China, prospects of the Chinese
economy and Brexit issues, the effects of financial and capital market fluctuations, and the impact that the consumption
tax hike to 10% effective October 1, 2019, has on domestic demand are among factors requiring attention.
In terms of the office building market, resilient demand backed by strong corporate business performance is expected tolead to vacancy rates continuing to hover at a low level and rent also continuing to be on the rise in Tokyo and Osaka
where SANKEI REAL ESTATE’s portfolio assets are located. Meanwhile, in terms of the hotel market, despite decrease in
the number of visitors to Japan from South Korea, the number of international visitors to Japan being on an increasing
trend overall and also the hosting of the Tokyo Olympic Games in 2020 are expected to lead to strong demand for hotel
guest rooms.
(A) External Growth Strategy
As a rule, SANKEI REAL ESTATE aims to steadily expand the scale of its assets through sponsorship support from The
Sankei Building Co., Ltd.
SANKEI REAL ESTATE will not only promote acquisition of The Sankei Building Co., Ltd.’s portfolio but also properties
held by third parties by leveraging the sourcing capabilities of The Sankei Building Co., Ltd. Upon investment, efforts will
be made to maintain and improve quality based on a comprehensive judgment of the real estate, etc.’s asset value anddegree of contribution to the entire portfolio by sufficiently verifying the real estate, etc.’s profitability and stability overthe medium to long term, risk factors and other factors, while taking into account the real estate, etc.’s characteristics,
market environment to which the real estate, etc. belongs and other factors.
SANKEI REAL ESTATE aims for sustainable growth and maximization of unitholder value by expanding the scale of assets
under management while maintaining and improving earnings of assets under management over the medium to longterm by putting into practice such initiatives.
(B) Internal Growth Strategy
As a rule, SANKEI REAL ESTATE aims for steady internal growth through The Sankei Building Co., Ltd.’s sponsorshipsupport.
The Sankei Building Group firstly boasts the functions of planning and development of properties of a wide range ofasset types not only meeting its own holding and leasing needs but also capturing various real estate investor needs,
additionally boasts the functions to attract tenants and customers by utilizing its vast and strong network, and also
boasts a diverse array of operation and management functions, such as property management, building management,
construction management and building maintenance for real estate under its management.
SANKEI REAL ESTATE will utilize the Sankei Building Group’s comprehensive operation and management functions
ranging from real estate planning and development to lease-up, operation and management through collaboration
within the Sankei Building Group with The Sankei Building Co., Ltd. at the core.
In addition, SANKEI REAL ESTATE will execute the following measures, etc. to aim for greater revenue and stable growthof earnings from management of assets under management.
(a) Strive to provide services for tenants’ comfortable use while strengthening and enhancing tenant relationships inorder to maintain and improve tenant satisfaction so as to maintain and improve the occupancy rate and rent ofassets under management.
(b) Seek to maintain and improve the market competitiveness of assets under management through planning andimplementation of repairs and capital expenditures by taking into consideration the state and characteristics ofassets under management, real estate market conditions, tenant needs and other factors.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(c) Strive to maintain and improve earnings by conducting agile leasing activities with a continual grasp of leasing
market trends.
(d) Adopt ongoing initiatives to reduce operating and management costs and consider for the environment by
periodically verifying the validity of operations, management level and costs of assets under management. In doing
so, the balance with the market competitiveness of assets under management and perspective from maintaining
and improving tenant satisfaction are taken into consideration.
(C) Financial Strategy
SANKEI REAL ESTATE will conduct appropriate and sound financial management while considering for agility of financing
activities, stability of cash flows and other matters in order to secure stable earnings and steady growth of assets undermanagement over the medium to long term.
(a) Equity Financing
Issuance of new investment units shall be in an agile manner with due consideration to investment unit dilution,
while also taking into account the capital market trends, financial environment, timing of acquisition of the realestate, etc. to be newly acquired, ratio of interest-bearing liabilities to total assets and other factors in acomprehensive manner.
(b) Debt Financing
Upon borrowing, etc., fund procurement shall be executed in an appropriate manner by taking into account thebalance between interest rate trends, market levels, financial agility, long-term business relationship and security,and by considering the borrowing period, fixed or floating interest rate, provision of collateral or not, fees and otherterms and conditions of procurement of interest-bearing liabilities.
In addition, to secure financial soundness, the basic policy shall be to set the upper limit for the LTV ratio at 60% inprinciple (however, the LTV ratio may temporarily exceed the range of the upper limit for the LTV ratio for the purpose of
new asset acquisition, etc.). As a rule, SANKEI REAL ESTATE will maintain an approximate range of 40% to 50% during
normal operations.
ii. Significant Subsequent Events
Issuance of New Investment Units
SANKEI REAL ESTATE passed resolutions at the meeting of the board of directors held on August 6, 2019, and August 21,
2019, on the following issuance of new investment units, payment for which was completed on September 2, 2019, for
the issuance of new investment units through public offering and on September 26, 2019, for the issuance of new
investment units through third-party allotment.
The proceeds from the issuance of new investment units through public offering were used as part of the funds foracquisition of the real estate trust beneficiary rights to 4 properties as presented later in this document under“(Reference Information) (B) Acquisition of Assets” that were acquired on September 3, 2019. In addition, the proceedsfrom the issuance of new investment units through third-party allotment were used as the entire amount of the funds
for early repayment of short-term borrowings in the amount of 600 million yen as presented later in this document
under “(Reference Information) (A) Borrowing of Funds” made on October 7, 2019, and the remaining amount is planned
to be used as part of the funds for acquisition of specified assets or part of the funds for repayment of borrowings in the
future as funds on hand.
(Issuance of new investment units through public offering)Number of new investment units issued:
Issue price (offer price):

111,619 units
118,734 yen per unit

Total amount of issue price (offer price):
Paid-in amount (issue amount):

13,252,970,346 yen
114,471 yen per unit

Total amount of paid-in amount (issue amount):
Payment due date:

12,777,138,549 yen
September 2, 2019

(Issuance of new investment units through third-party allotment)
Number of new investment units issued:
Paid-in amount (issue amount):

5,581 units
114,471 yen per unit

Total amount of paid-in amount (issue amount):
Payment due date:

638,862,651 yen
September 26, 2019-

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
(Reference Information)(A) Borrowing of Funds
SANKEI REAL ESTATE conducted the following borrowing of funds to use as part of the funds for acquisition andincidental expenses, together with the proceeds from the issuance of new investment units through public offering aspresented earlier in this document under “Issuance of New Investment Units,” upon acquisition of the real estate trust
beneficiary rights to 4 properties as presented later in this document under “(Reference Information) (B) Acquisition ofAssets.”Borrowing
Interest rate
Maturity Repayment
Term
LenderamountDescription(Note 1)date
method(million yen)
Base rate
Lump-sum Unsecured
Short- Mizuho Bank, Ltd.
(JBA 1-month
Sept. 3,456
repayment and nonterm
Sumitomo Mitsui Banking Corporation
Japanese Yen TIBOR)
2020
at maturity guaranteed+ 0.150%
Base rate
ShortLump-sum Unsecured
Mizuho Bank, Ltd.
(JBA 1-month
Sept. 3,term
600
repayment and nonSumitomo Mitsui Banking Corporation
Japanese Yen TIBOR)
2020(Note 2)
at maturity guaranteed+ 0.150%
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Base rate
Lump-sum Unsecured
Long- Mizuho Trust & Banking Co., Ltd.
(JBA 3-month
Sept. 3,
5,900
repayment and nonterm
Sumitomo Mitsui Trust Bank, Limited
Japanese Yen TIBOR)
2022
at maturity guaranteed
Shinsei Bank, Limited+ 0.200%
Resona Bank, Limited
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Development Bank of Japan Inc.
Lump-sum Unsecured
LongSept. 3,
Mizuho Trust & Banking Co., Ltd.
5,900
0.36200%
repayment and nonterm
2023
Sumitomo Mitsui Trust Bank, Limited
at maturity guaranteed
Shinsei Bank, Limited
Resona Bank, Limited(Note 1) The base rate applicable to the calculation period for the interest payable on each interest payment date shall be decided two businessdays prior to the immediately preceding interest payment date (the drawdown date in the case of the first interest calculation period).
For the JBA Japanese Yen TIBOR, please check the website of JBA TIBOR Administration (http://www.jbatibor.or.jp/english/rate/).
(Note 2) The entire amount was repaid early on October 7, 2019, using the proceeds from the issuance of new investment units through thirdparty allotment with September 26, 2019, as the payment due date as the funds for the repayment, and there is thus no balance
outstanding as at the date of this document.

(B) Acquisition of Assets
SANKEI REAL ESTATE conducted the following acquisition of real estate trust beneficiary rights to 4 properties (totalacquisition price: 23,930 million yen) on September 3, 2019.
Asset
type

Property
numberA-2

Officebuildings

Sub
assetsA-8

Acquisition price(million yen)
(Note)

Real estate trust
beneficiary right

4,500

Real estate trust
beneficiary right

10,040Ota-ku,Tokyo
Naka-ku,
Hiroshima-shi,
Hiroshima

Real estate trust
beneficiary right

5,400

Real estate trust
beneficiary right

3,990

‐

‐

23,930Location

BREEZÉ TOWER(additional
acquisition)
Shinagawa Seaside
TS Tower

Kita-ku,
Osaka-shi,
Osaka
Shinagawa-ku,
Tokyo

A-9

Omori Park Building

B-2

Hotel Intergate
Hiroshima

Total (4 properties)(Note)

Acquisition asset

Property nameSellerThe Sankei
Building
Co., Ltd.
Godo Kaisha
SKB 3

Acquisition
date
Sept. 3,2019
Sept. 3,
2019

Godo Kaisha
SKB 1
The Sankei
Building
Co., Ltd.

Sept. 3,
2019

‐

‐

Sept. 3,2019

“Acquisition price” is the sale and purchase price of each trust beneficiary right stated in each sale and purchase agreement for theacquisition assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local
consumption tax and the various expenses required for the acquisition.
The acquisition price for “BREEZÉ TOWER” is the figure equivalent to the 15% quasi co-ownership interest in sectional ownership of theoffice portion of the building, etc. additionally acquired by SANKEI REAL ESTATE. The acquisition price for “Shinagawa Seaside TS Tower”
is the figure equivalent to the 25% quasi co-ownership interest in sectional ownership of the buildings, etc. acquired by SANKEI REALESTATE.

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5-SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
iii.

Operating Forecasts
SANKEI REAL ESTATE’s operating forecasts for the fiscal period ending February 2020 (from September 1, 2019 toFebruary 29, 2020) and fiscal period ending August 2020 (from March 1, 2020 to August 31, 2020) are as follows:

Fiscal period
ending Feb. 2020
Fiscal period
ending Aug. 2020

Distribution
per unit

Distribution
in excess ofearnings
per unit

Operatingrevenue

OperatingprofitOrdinary
profitProfitmillion yen

million yen

million yen

million yen

yen

yen

1,951

1,100

960

959

2,689

-

2,005

928

842

841

2,358

-

(excluding
distribution
in excess ofearnings)

Furthermore, for the assumptions underlying the operating forecasts, please refer to “Assumptions Underlying the
Operating Forecasts for the Fiscal Period Ending February 2020 (from September 1, 2019 to February 29, 2020) and Fiscal
Period Ending August 2020 (from March 1, 2020 to August 31, 2020)” presented below.
(Note)

The forecast figures above are the current forecasts calculated under certain assumptions. Accordingly, the actual operating revenue,
operating profit, ordinary profit, profit, distribution per unit and distribution in excess of earnings per unit may vary due to changes in
the circumstances. In addition, the forecasts are not a guarantee of the amount of distribution.

Assumptions Underlying the Operating Forecasts for the Fiscal Period Ending February 2020 (from September 1, 2019 to February 29,2020) and Fiscal Period Ending August 2020 (from March 1, 2020 to August 31, 2020)
Item

Assumptions

Accounting
period・Fiscal period ending February 2020 (2nd fiscal period) (from September 1, 2019 to February 29, 2020) (182 days)
・Fiscal period ending August 2020 (3rd fiscal period) (from March 1, 2020 to August 31, 2020) (184 days)
・The assumption is that the real estate and real estate trust beneficiary rights (total of 11 properties) held by
SANKEI REAL ESTATE as of the date of this document (hereinafter, the “current portfolio assets”), and that

Assets undermanagement

these will continue to be held and there will be no acquisition of new properties through to the end of the
fiscal period ending August 2020.
・In actual practice, change may arise due to acquisition of new properties, disposition of portfolio properties,
etc.
・Leasing business revenue of the current portfolio assets is calculated by taking into account various factors,

Operatingrevenuesuch as lease agreements that have been concluded, tenant trends and market trends.
・Note that the calculations take into account increase in leasing business revenue due to the expiration of therent-free period for some tenants, among other factors.
・The assumption is that there will be no delinquent or unpaid rent by tenants.
・Of operating expenses, the main components are as follows:
Fiscal period
ending Feb. 2020
645

(Unit: million yen)
Fiscal period
ending Aug. 2020
828

Management fee

161

161

Utilities expenses

122

122

Repair expenses

63

60

Property taxes

23

215

Depreciation

217

207

205

247

135

177

Expenses related to leasing business [Total]

Operatingexpenses

Other than expenses related to leasing business [Total]
Asset management fee

・Of expenses related to leasing business, which are the main operating expenses, the expenses other thandepreciation are calculated on the basis of historical data and by taking into consideration the factors
causing fluctuation in each of the expenses.
・Depreciation is calculated using the straight-line method.
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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
Item

Operatingexpenses(cont.)

Non-operating
expenses

Interest-bearing
liabilities

Investment units

Assumptions
・In general, fixed asset tax, city planning tax, etc. are calculated on a pro rata basis and reimbursed at thetime of property acquisition with the previous owner upon transactions of real estate, etc. At SANKEI REALESTATE, the amount equivalent to the reimbursement is included in the cost of acquisition and thus not
expensed in the business period in which the property acquisition date falls in the case of the properties forwhich such reimbursement is made at the time of transaction. Furthermore, fiscal 2019 fixed asset tax, city
planning tax, etc. will be expensed starting from the fiscal period ending February 2020 (please refer to“Property taxes” in the table above).
・Repair expenses for buildings is the amount estimated based on medium- to long-term repair plans
formulated by the asset management company. However, repair expenses possibly increasing in amount or
additionally arising from unforeseeable factors may result in repair expenses differing materially from theforecast amount.
・As investment unit issuance expenses for the issuance of new investment units, 43 million yen is planned tobe recorded for the fiscal period ending February 2020.
・As interest expenses and other borrowing-related expenses, 97 million yen is assumed for the fiscal period
ending February 2020 and 86 million yen for the fiscal period ending August 2020.
・The assumption is that total interest-bearing liabilities will be 34,000 million yen at the end of the fiscal
period ending February 2020 and 33,500 million yen at the end of the fiscal period ending August 2020.
・The assumption is that (i) With refund of consumption taxes corresponding to the fiscal period ended
August 2019 scheduled to take place during the fiscal period ending February 2020, the concerned refund,etc. will be used as the source of funds to repay a portion (613 million yen) of existing borrowings during the
fiscal period ending February 2020, (ii) With refund of consumption taxes corresponding to the fiscal period
ending February 2020 scheduled to take place during the fiscal period ending August 2020, the concerned
refund, etc. will be used as the source of funds to repay a portion (456 million yen) of existing borrowings
during the fiscal period ending August 2020, and (iii) There will be no change in the balance of borrowings
other than the above through to the end of the fiscal period ending August 2020.
・LTV ratio is expected to be 46.0% at the end of the fiscal period ending February 2020 and 45.6% at the endof the fiscal period ending August 2020. LTV ratio is calculated by the following formula and rounded to one
decimal place.
LTV ratio = Total interest-bearing liabilities ÷ Total assets × 100
・The assumption is that the total number of investment units issued and outstanding as of the date of thisdocument is 356,800 units and that there will be no change in the number of investment units due toissuance of new investment units, etc. through to the end of the fiscal period ending August 2020.
・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the forecast total
number of investment units issued and outstanding at the end of the fiscal period ending February 2020 andfiscal period ending August 2020 of 356,800 units.

Distribution
per unit(excluding
distribution
in excess ofearnings)

・Distribution per unit (excluding distribution in excess of earnings) is calculated based on the assumption that
distribution of earnings will be in accordance with the policy on distribution of cash provided in SANKEI REALESTATE’s articles of incorporation.
・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors, such as
fluctuation in leasing business revenue accompanying change in assets under management, change intenants or other event, or incurrence of unexpected repairs.

Distribution
in excess ofearnings
per unit

・No cash distribution in excess of earnings is planned to be made at this point in time.

Other

・The assumption is that there will be no amendment of laws and regulations, tax systems, accounting
standards, listing regulations provided by Tokyo Stock Exchange, Inc., rules provided by The Investment
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen material change in general economic trends, real estatemarket conditions, etc.

(2) Investment Risks
Disclosure is omitted, because there is no significant change from “Investment Risks” in the securities registration statement(submitted on August 6, 2019, as amended).
-

7-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019

2. Financial Statements(1) Balance Sheet(Unit: thousand yen)
1st fiscal period(as of Aug. 31, 2019)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
LandConstruction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust , net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust , net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
SoftwareTotal intangible assets
Investments and other assets
Long-term prepaid expenses
Deferred tax assets
Leasehold and guarantee deposits
Total investments and other assets
Total non-current assets
Total assets

1,998,469
1,432,427
326,641
38,009633,870426
4,429,846

147,558(2,657)
144,901353(4)349
2,445,779
2,130
7,735,371(121,060)
7,614,310
15,658(216)
15,442
345
(3)
341
800
(50)
749
33,982,039
23,76944,229,814
8,593
8,593
40,38621
10,00050,40844,288,816
48,718,662

-

8

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
(Unit: thousand yen)
1st fiscal period(as of Aug. 31, 2019)
Liabilities
Current liabilities
Operating accounts payable
Short-term borrowings
Accounts payable - otherAccrued expenses
Income taxes payable
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term borrowings
Leasehold and guarantee deposits received
Leasehold and guarantee deposits received in trust
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets-

9360,805
4,913,736
177,848
16,187
1,347
176,601
200,3435,846,869
17,400,000
90,922
1,920,760
19,411,683
25,258,553

23,124,900*1-

335,209335,20923,460,109
23,460,109
48,718,662

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(2) Statement of Income(Unit: thousand yen)
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Operating revenue
Leasing business revenue
Other leasing business revenue
Total operating revenue
Operating expenses
Expenses related to leasing business
Asset management fee
Asset custody fee
Administrative service fees
Remuneration for directors (and other officers)
Other operating expenses
Total operating expenses
Operating profit
Non-operating income
Interest income
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing related expenses
Investment unit issuance expenses
Organization expenses
Other
Total non-operating expenses
Ordinary profit
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitRetained earnings brought forward
Unappropriated retained earnings (undisposed loss)*1*1

1,079,443
77,6381,157,082*1

315,059
105,532
1,297
9,470
6,000
19,995457,355
699,72714
1435,827
159,201
99,59358,157
10,424363,204
336,537
336,537
1,349
(21)
1,327
335,209335,209-10-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(3) Statement of Unitholders’ Equity
1st fiscal period (from November 19, 2018 to August 31, 2019)(Unit: thousand yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance at beginning of period

Unappropriatedretained earnings(undisposed loss)
-

-

Total
net assets

Total
unitholders’equityTotal
surplus---23,124,900

23,124,900

Changes in items during period
Issuance of new investment units

23,124,900

ProfitTotal changes in items during period
Balance at end of period

335,209335,209335,209335,209

23,124,900

335,209335,20923,460,109

23,460,109*1 23,124,900

335,209335,20923,460,109

23,460,109

-

11

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(4) Statement of Cash Distribution
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019I.

Unappropriated retained earnings

335,209,333 yen

II. Amount of distribution

335,200,400 yen[Amount of distribution per unit][1,399 yen]

III. Retained earnings carried forward
Method of calculation ofamount of distribution

8,933 yenIn accordance with the policy on
distribution of cash provided in Article 36,
Paragraph 1 of SANKEI REAL ESTATE’s
articles of incorporation, the amount of
distribution shall be in excess of theamount equivalent to 90% of the amountof SANKEI REAL ESTATE’s earnings available
for distribution provided in Article 67-15 of
the Act on Special Measures Concerning
Taxation, but no more than the amount of
earnings. Based on such policy, the decision
was made to distribute 335,200,400 yen,which is the largest integral multiple of thetotal number of investment units issued
and outstanding (239,600 units) in an
amount not in excess of unappropriatedretained earnings,
earnings.

asdistributionofThe distribution of cash in excess ofearnings provided in Article 36, Paragraph 2of SANKEI REAL ESTATE’s articles ofincorporation will not be made.

-

12

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(5) Statement of Cash Flows(Unit: thousand yen)
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Cash flows from operating activities
Profit before income taxes

336,537

Depreciation
Investment unit issuance expenses

124,798
99,593

Interest income
Interest expenses(14)
35,827

Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable(326,641)(633,870)

Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable(38,009)126,768

Increase (decrease) in accounts payable - other
Increase (decrease) in advances received

159,533
176,601

Increase (decrease) in deposits received
Decrease (increase) in long-term prepaid expenses

200,343(40,386)

Decrease (increase) in other assets(426)

Subtotal

220,654

Interest received

14

Interest paid
Income taxes paid

(19,639)(2)

Net cash provided by (used in) operating activities

201,026

Cash flows from investing activities
Purchase of property, plant and equipment(2,574,113)

Purchase of property, plant and equipment in trust
Proceeds from leasehold and guarantee deposits received(41,527,340)
90,944

Refund of leasehold and guarantee deposits received
Proceeds from leasehold and guarantee deposits received in trust(21)
1,927,822

Refund of leasehold and guarantee deposits received in trust
Payments of leasehold and guarantee deposits(7,062)(10,000)

Other, net(9,400)Net cash provided by (used in) investing activities(42,109,171)

Cash flows from financing activities
Proceeds from short-term borrowings

6,010,169

Repayments of short-term borrowings
Proceeds from long-term borrowings(1,096,433)
17,400,000

Proceeds from issuance of investment units

23,025,306

Net cash provided by (used in) financing activities

45,339,042

Net increase (decrease) in cash and cash equivalents

3,430,897

Cash and cash equivalents at beginning of period-

Cash and cash equivalents at end of period

*1

-

13

-

3,430,897

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1.

Method of depreciation of
non-current assets(1) Property, plant and equipment (including trust assets)
The straight-line method is adopted. Furthermore, the useful life of coreproperty, plant and equipment is as follows:
Buildings
2–65 years
Structures
Machinery and equipment

6–59 years
15 years

Tools, furniture and fixtures(2) Intangible assets

4 years

The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
2.

Accounting for deferred assets(1) Organization expenses
The entire amount is expensed as incurred.
(2) Investment unit issuance expenses
The entire amount is expensed as incurred.

3.

Standards forrevenue and expense recognition

Accounting for fixed asset tax, etc.
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estateor trust beneficiary rights that have real estate as trust assets held, themethod adopted is that, of the tax amount assessed and determined, theamount corresponding to the concerned accounting period is expensed as
expenses related to leasing business.
Furthermore, the amount equivalent to fixed asset tax, etc. in the initial fiscal
year borne by SANKEI REAL ESTATE upon acquisition of real estate or trust
beneficiary rights that have real estate as trust assets is not recognized as
expenses but included in the cost of acquisition of the concerned real estate,etc. The amount equivalent to fixed asset tax, etc. included in the cost of
acquisition for the fiscal period under review was 244,360 thousand yen.

4.

Scope of funds inthe statement of cash flows

The funds (cash and cash equivalents) in the statement of cash flows comprise cashon hand and cash in trust, demand deposits and deposits in trust, and short-term
investments with a maturity of 3 months or less from the date of acquisition thatare readily convertible to cash and that are subject to an insignificant risk ofchanges in value.

5.

Other significant matters serving
as the basis for preparation of
the financial statements(1) Accounting for trust beneficiary rights that have real estate, etc. as trust assets
Concerning trust beneficiary rights that have real estate, etc. as trust assets
held, all accounts of assets and liabilities within trust assets and all accounts ofrevenue and expenses from the trust assets are recognized in the relevant
account item of the balance sheet and the statement of income.
Furthermore, the following material items of the trust assets recognized in therelevant account item are separately listed on the balance sheet.
i. Cash and deposits in trust
ii.

iii.

Buildings in trust; Structures in trust; Machinery and equipment in trust;Tools, furniture and fixtures in trust; Land in trust; Construction inprogress in trust
Leasehold and guarantee deposits received in trust(2) Accounting for consumption tax, etc.
The accounting for consumption tax and local consumption tax is by themethod of exclusion of the taxes.

-

14

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(8) Notes to the Financial Statements[Notes to the Balance Sheet]*1. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations
1st fiscal period(as of Aug. 31, 2019)50,000 thousand yen[Notes to the Statement of Income]*1. Breakdown of operating income (loss) from real estate leasing(Unit: thousand yen)
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
A. Operating revenue from real estate leasing
Leasing business revenue
Rental revenue
Common area maintenance revenue

978,011
101,432

Other leasing business revenue
Utilities reimbursement

1,079,443

53,219Parking revenue
Other rental revenue

18,724
5,695

Total operating revenue from real estate leasing

77,6381,157,082

B. Operating expenses from real estate leasing
Expenses related to leasing businessOutsourcing expenses
Utilities expenses

98,04568,504

Land rent
Repair expenses

1,355
10,663

Insurance premium
Trust fee

2,844
1,846

Depreciation
Other expenses related to leasing business

123,992
7,807

Total operating expenses from real estate leasing

315,059

C. Operating income (loss) from real estate leasing [A−B]

842,023[Notes to the Statement of Unitholders’ Equity]*1. Total number of investment units authorized and total number of investment units issued and outstanding
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Total number of investment units authorized

10,000,000 units

Total number of investment units issued and outstanding

239,600 units[Notes to the Statement of Cash Flows]*1. Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Cash and deposits

1,998,469 thousand yen

Cash and deposits in trust

1,432,427 thousand yen

Cash and cash equivalents

3,430,897 thousand yen-

315,059

15-SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
[Notes on Lease Transactions]Operating lease transactions (as lessor)
Future minimum lease payments
1st fiscal period(as of Aug. 31, 2019)
Due within 1 year

1,713,466 thousand yen

Due after 1 year

10,658,891 thousand yen

Total

12,372,357 thousand yen[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
SANKEI REAL ESTATE shall procure funds in a well-balanced manner through borrowing from financial institutions,issuance of investment corporation bonds, issuance of new investment units, etc. to contribute to steady growth ofassets under management as well as efficient operation and stability of management.
Upon borrowing from financial institutions, issuance of investment corporation bonds, etc., the fund procurement
shall be in a manner that gives due consideration to the balance between agility in fund procurement and financial
stability, characteristics of to-be-acquired real estate, etc. Specifically, the procurement means, ratio of long-term debt,
ratio of fixed-rate debt, staggering of maturities, provision of collateral or not, etc. shall be considered. If borrowing,
lenders shall be limited to the qualified institutional investors provided in the Financial Instruments and Exchange Act(however, limited to the institutional investors provided in Article 67-15 of the Act on Special Measures Concerning
Taxation).
Issuance of new investment units shall be for the purpose of expansion of asset size and enhancement of profitability,
and implementation decided by taking into account the LTV ratio, dilution of existing unitholders’ rights andaccompanying decline in transaction price of investment units, etc. and in light of the financial environment.
Derivative transactions may be conducted for the purpose of hedging the risk of fluctuation in interest rates and otherrisks on SANKEI REAL ESTATE’s liabilities. No derivative transactions were conducted in the fiscal period under review.
(2) Description of financial instruments and associated risks, and risk management system
Borrowings are mainly for the purpose of procuring funds for acquisition of assets and funds for repayment of
obligations. Borrowings are exposed to the risk of inability to refinance upon becoming due for repayment, risk of risein the interest rate payable, etc., but the risks are mitigated by considering fund procurement that is well balanced
through issuance of investment units, etc. while also diversifying fund procurement sources and staggering maturities.
In addition, the risk of rise in interest rates on SANKEI REAL ESTATE’s operations is managed by closely watchinginterest rate trends and keeping the LTV ratio under control in an appropriate manner.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments is values based on market price, but may otherwise include values based onreasonable calculation when no market price is available. Certain assumptions, etc. are adopted in the calculation of
the concerned values. Accordingly, the concerned values may vary when different assumptions, etc. are adopted.
2.

Matters concerning fair value, etc. of financial instruments

The following are the carrying amount and fair value as of August 31, 2019, and the amount of difference between these.
Financial instruments for which estimation of fair value is recognized to be extremely difficult are not included in thefollowing table (Note 2).
Carrying amount(thousand yen)
(1) Cash and deposits(2) Cash and deposits in trust
Total assets(1) Short-term borrowings(2) Long-term borrowings
Total liabilities-

Fair value(thousand yen)Amount of difference(thousand yen)

1,998,469
1,432,427

1,998,469
1,432,427-

3,430,897

3,430,897-

4,913,736
17,400,000

4,913,736
17,436,222

36,222

22,313,736

22,349,958

36,22216-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
(Note 1) Method of calculation of the fair value of financial instruments
Assets(1) Cash and deposits; (2) Cash and deposits in trust
Because these are settled in a short period of time, the fair value is approximately the same as the book value andthus stated at that book value.
Liabilities(1) Short-term borrowings
Because these are settled in a short period of time and have floating interest rates, the fair value is approximately thesame as the book value and thus stated at that book value.
(2) Long-term borrowings
Of long-term borrowings, because those with floating interest rates reflect market interest rates in a short period oftime, the fair value is thought to resemble the book value and thus stated at that book value. However, in the case oflong-term borrowings with fixed interest rates, the fair value is calculated based on the present value of their future
cash flows discounted over the time to maturity and at the rate adjusted for credit risks.
(Note 2) Financial instruments for which estimation of fair value is recognized to be extremely difficult
1st fiscal period(as of Aug. 31, 2019)
Leasehold and guarantee deposits received

90,922 thousand yen

Leasehold and guarantee deposits received in trust

1,920,760 thousand yen* “Leasehold and guarantee deposits received” and “Leasehold and guarantee deposits received in trust” are not subject to disclosure of fair value,
because there being no market price and, even if the lease contract period has been set, there being the possibility of contract cancellation
before expiration, contract extension or contract renewal make calculating the actual deposit period impossible and reasonable projection of
future cash flows is thus recognized to be extremely difficult.

(Note 3) Amount of redemption of monetary claims scheduled to be due after the end of the fiscal period (August 31, 2019)(Unit: thousand yen)
Category

Due within
1 yearCash and deposits

1,998,469

-

-

-

-

-

Cash and deposits in trust

1,432,427

-

-

-

-

-

3,430,897

-

-

-

-

-

Total

Due after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years(Note 4) Amount of repayment of borrowings scheduled to be due after the end of the fiscal period (August 31, 2019)(Unit: thousand yen)
Due within
1 yearDue after
1 to 2 years

Due after
2 to 3 years

Due after
3 to 4 years

Due after
4 to 5 years

Due after
5 years

Short-term borrowings

4,913,736

-

-

-

-

-

Long-term borrowings-

4,800,000

5,600,000

3,700,000

3,300,000-

4,913,736

4,800,000

5,600,000

3,700,000

3,300,000-

Total[Notes on Securities]
Not applicable.
[Notes on Derivative Transactions]Not applicable.
[Notes on Retirement Benefits]
Not applicable.

-

17

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
[Notes on Tax-Effect Accounting]1.

Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities
1st fiscal period(as of Aug. 31, 2019)

Deferred tax assets
Non-deductible accrued enterprise tax

21 thousand yen

Total

21 thousand yen

Deferred tax assets, net
2.

21 thousand yen

Breakdown of major components that caused any significant differences between the statutory tax rate and theeffective income tax rate after application of tax-effect accounting
1st fiscal period(as of Aug. 31, 2019)

Statutory tax rate

31.51%[Adjustments]
Deductible distribution payable(31.38%)

Other

0.26%

Effective income tax rate after application of tax-effect accounting

0.39%[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method]
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
1st fiscal period (from November 19, 2018 to August 31, 2019)

Attribute

Name ofcompany, etc.
orname ofpersonParentcompany

The Sankei
Building
Co., Ltd.
(Note 3)

Location

Percentage ofShare capitalvoting rights, Description of relationshipor
Description ofetc.
investments
business
Concurrent
held by (in)in capitalorholding ofBusiness
SANKEI(thousandoccupation
REAL ESTATE positions, etc. relationshipyen)
by directors(%)

Description oftransaction

Transaction
amount(thousandyen)

Chiyoda-ku,
Tokyo

100.00%held in
SANKEIREAL ESTATE

Receipt ofinvestments
in capital(incorporation
through
privateplacement)

100,000

28,120,463

Real estatebusiness-

Parentcompany

Account
item

Balanceat end ofperiod(thousand
yen)

-

-

(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption
tax, etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) The Sankei Building Co., Ltd. fell under the category of parent company with 100.00% voting rights held in SANKEI REAL ESTATE at the timeof the receipt of investments in capital, but an issuance of new investment units through public offering resulted in the voting rights
becoming 4.74% and thus no longer falls under the category of parent company as of the last day of the fiscal period. Accordingly,
percentage of voting rights, etc. held in SANKEI REAL ESTATE and transaction amount are the percentage and amount for the period when
it was a parent company.

2.

Affiliated company, etc.
Not applicable.

3. Fellow subsidiary, etc.
1st fiscal period (from November 19, 2018 to August 31, 2019)

Attribute

Name ofcompany, etc.
orname ofpersonLocation

Sankei
Subsidiary Building Asset
Chiyoda-ku,
of parent ManagementTokyo
companyCo., Ltd.
(Note 3)

Percentage ofShare capitalvoting rights, Description of relationshipor
Description ofetc.
investments
business
Concurrent
held by (in)in capitalorholding ofBusiness
SANKEI(thousandoccupation
REAL ESTATE positions, etc. relationshipyen)
by directors(%)

Description oftransaction

Transaction
amount(thousandyen)

Account
item

Balanceat end ofperiod(thousandyen)

Concurrent Outsourcing
holding ofof asset
positionsmanagementby 1 director
services

Payment oforganizer fee

50,000(Note 4)--

100,000

Investment
managementbusiness

-

-

18

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption
tax, etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) As stated in “(Note 3)” of “1. Parent company, major corporate unitholder, etc.,” The Sankei Building Co., Ltd. no longer falls under the
category of parent company of SANKEI REAL ESTATE. Consequently, Sankei Building Asset Management Co., Ltd., too, no longer falls under
the category of fellow subsidiary, etc. Accordingly, the transaction amount for organizer fee is the amount for the period when it was a
fellow subsidiary, etc.
(Note 4) The amount of organizer fee is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles of incorporation.

4. Director, major individual unitholder, etc.
1st fiscal period (from November 19, 2018 to August 31, 2019)

Attribute

Director

Name ofcompany, etc.
orname ofpersonLocation

Yuichi Ota-

Percentage ofShare capitalvoting rights, Description of relationshipor
Description ofetc.
investments
business
Concurrent
held by (in)in capitalorholding ofBusiness
SANKEI(thousandoccupation
REAL ESTATE positions, etc. relationshipyen)
by directors(%)-

Executive
Director of
SANKEIREAL ESTATE,
andPresident and
Chief
Executive
Officer ofSankei
Building AssetManagement
Co., Ltd.

Executive Director of
SANKEI REAL ESTATE,
andPresident andChief Executive Officer ofSankei Building AssetManagement Co., Ltd.

-

Description oftransaction

Transaction
amount(thousandyen)

Payment oforganizer fee(Note 3)50,000

Payment of
asset
management
fee to asset
managementcompany(Note 3)

Accounts
539,489
payable (Note 4)
otherAccount
item-

Balanceat end ofperiod(thousandyen)-

113,975(Note 1) Of the related-party transactions subject to disclosure, the related-party transactions including significant transactions are disclosed.
(Note 2) Of the amounts above, transaction amount does not include consumption tax, etc., while balance at end of period includes consumption
tax, etc. Amounts are rounded down to the nearest thousand yen.
(Note 3) Payment of organizer fee and asset management fee is for transactions conducted by Yuichi Ota as representative of Sankei Building AssetManagement Co., Ltd., and transaction amount is based on the terms and conditions provided in SANKEI REAL ESTATE’s articles ofincorporation.
(Note 4) Asset management fee includes the portion of the fee for property acquisition included in the book value of individual real estate, etc.
(433,957 thousand yen).
(Note 5) Transaction terms and conditions are decided based on the actual market conditions.

[Notes on Asset Retirement Obligations]Not applicable.

-

19

-

SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
[Notes on Investment and Rental Properties]
SANKEI REAL ESTATE owns office buildings, etc. for the purpose of earning revenue from leasing. The carrying amount,amount of change during period and fair value of these investment and rental properties are as follows:(Unit: thousand yen)
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Carrying amount
Balance at beginning of period-

Amount of change during period

44,203,915

Balance at end of period

44,203,915

Fair value at end of period

47,000,000(Note 1) Carrying amount is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Of the amount of change during period, the amount of increase is mainly attributable to new property acquisition of 8 properties(44,327,907 thousand yen), etc., while the amount of decrease is mainly attributable to depreciation (123,992 thousand yen).
(Note 3) Fair value at end of period is the appraisal value by an external real estate appraiser.

Furthermore, the income (loss) concerning investment and rental properties is presented in “Notes to the Statement of
Income.”[Notes on Segment Information, Etc.]
1.

Segment information
The information is omitted, because SANKEI REAL ESTATE has a single segment—the real estate leasing business.

2.

Related information

1st fiscal period (from November 19, 2018 to August 31, 2019)(1) Information by product and service
The information is omitted, because operating revenue to external customers for a single group of products andservices exceeds 90% of operating revenue on the statement of income.
(2) Information by geographic areai.

ii.

Operating revenue
The information is omitted, because operating revenue to external customers in Japan exceeds 90% of operating
revenue on the statement of income.
Property, plant and equipment
The information is omitted, because the amount of property, plant and equipment located in Japan exceeds 90%of the amount of property, plant and equipment on the balance sheet.

(3) Information by major customer(Unit: thousand yen)
Name of customer

Operating revenue

GRANVISTA Hotels & Resorts Co., Ltd.

194,716-

20-

Related segment
Real estate leasing businessSANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
[Notes on Per Unit Information]
1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Net assets per unit

97,913 yen

Earnings per unit

2,312 yen

(Note 1) Earnings per unit is calculated by dividing profit by the period’s daily weighted average number of investment units (144,970 units).
In addition, diluted earnings per unit is not stated, because there are no diluted investment units.
(Note 2) The basis for calculation of earnings per unit is as follows:

1st fiscal period
From: Nov. 19, 2018
To:
Aug. 31, 2019
Profit (thousand yen)335,209

Amount not available to common unitholders (thousand yen)-

Profit attributable to common investment units (thousand yen)335,209

Average number of investment units during period (units)

144,970[Notes on Significant Subsequent Events]
Issuance of New Investment Units
SANKEI REAL ESTATE passed resolutions at the meeting of the board of directors held on August 6, 2019, and August 21,
2019, on the following issuance of new investment units, payment for which was completed on September 2, 2019, for theissuance of new investment units through public offering and on September 26, 2019, for the issuance of new investment
units through third-party allotment. As a result, SANKEI REAL ESTATE has unitholders’ capital of 36,540,901 thousand yen
and total number of investment units issued and outstanding of 356,800 units as of September 26, 2019.
(Issuance of new investment units through public offering)Number of new investment units issued:

111,619 units

Issue price (offer price):
Total amount of issue price (offer price):

118,734 yen per unit
13,252,970,346 yen

Paid-in amount (issue amount):
Total amount of paid-in amount (issue amount):

114,471 yen per unit
12,777,138,549 yen

Payment due date:
September 2, 2019
Use of funds:
The funds were used as part of the funds for acquisition of the real estate trust beneficiary rights to
4 properties that were acquired on September 3, 2019.
(Issuance of new investment units through third-party allotment)
Number of new investment units issued:
5,581 units
Paid-in amount (issue amount):
Total amount of paid-in amount (issue amount):

114,471 yen per unit
638,862,651 yen

Payment due date:
September 26, 2019
Use of funds:
The funds were used as the entire amount of the funds for early repayment of short-termborrowings in the amount of 600 million yen made on October 7, 2019, and the remaining amount isplanned to be used as part of the funds for acquisition of specified assets or part of the funds for
repayment of borrowings in the future as funds on hand.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(9) Changes in Total Number of Investment Units Issued and Outstanding
Changes in unitholders’ capital and the total number of investment units issued and outstanding from the incorporation of
SANKEI REAL ESTATE to the last day of the fiscal period under review (August 31, 2019) are as follows:
Unitholders’ capital(thousand yen)
Date

Description
Increase(Decrease)

Balance

Total number of investment units
issued and outstanding(units)Remarks
Increase(Decrease)

BalanceNov. 19, 2018

Incorporation throughprivate placement

100,000

100,000

1,000

1,000

(Note 1)Mar. 11, 2019

Capital increase throughpublic offering

21,928,467

22,028,467

227,238

228,238(Note 2)

Apr. 10, 2019

Capital increase throughthird-party allotment

1,096,433

23,124,900

11,362

239,600(Note 3)(Note 1) Investment units were issued at a paid-in amount of 100,000 yen per unit upon the incorporation of SANKEI REAL ESTATE.
(Note 2) New investment units were issued through public offering at an issue price of 100,000 yen (paid-in amount of 96,500 yen) per unit for the
purpose of procuring funds for acquisition of new properties.
(Note 3) New investment units were issued through third-party allotment accompanying the capital increase through public offering at a paid-in
amount of 96,500 yen per unit.

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019

3. Reference Information(1) Information on Price of Assets under Management, Etc.
i. Investment Status
1st fiscal period(as of Aug. 31, 2019)
Asset group

Geographic area
(Note 1)

Asset type

Total amount held(million yen)
(Note 2)

As a percentage of
total assets(%) (Note 3)

2,591

5.3

ordinance (excluding above), core cities
and major regional cities--

Greater Tokyo, Osaka City and Nagoya City--

Cities designated by government
ordinance (excluding above), core cities--

32,527

66.8

-

-

9,085

18.6

-

-

9,085

18.6

-

-

44,203

90.7

Greater Tokyo, Osaka City and Nagoya City
Cities designated by government

Office buildings
Real estate
Sub assets

and major regional cities
Greater Tokyo, Osaka City and Nagoya City
Cities designated by government

Office buildings

ordinance (excluding above), core cities
and major regional cities
Greater Tokyo, Osaka City and Nagoya City

Real estatein trust

Cities designated by government
ordinance (excluding above), core cities

Sub assets

and major regional cities
Greater Tokyo, Osaka City and Nagoya City
Cities designated by government

Hotelsordinance (excluding above), core cities
and major regional cities
Subtotal
Deposits and other assets

4,514

9.3

Total assets

48,718100.0(Note 1) “Greater Tokyo” refers to Tokyo, Kanagawa Prefecture, Saitama Prefecture and Chiba Prefecture.
“Core cities” refers to cities with population of 200,000 or more (excluding Greater Tokyo, Osaka City and Nagoya City, and other cities
designated by government ordinance).
“Major regional cities” refers to cities that are municipalities with population of less than 200,000 and the Asset Management Company has
deemed certain demand can be found for specific asset types.
(Note 2) “Total amount held” is based on the carrying amount (in the case of real estate and real estate in trust, the depreciated book value) as ofAugust 31, 2019, rounded down to the nearest million yen. Furthermore, the total amount held for real estate in trust with hotel as the asset
type includes the book value of movables incidental to hotels.
(Note 3) “As a percentage of total assets” is rounded to one decimal place.

1st fiscal period(as of Aug. 31, 2019)
Amount(million yen)
(Note 1)

As a percentage of
total assets(%) (Note 2)

Total liabilities

25,258

51.8

Total net assets

23,46048.2

Total assets

48,718100.0(Note 1) The total liabilities, total net assets and total assets amounts are each based on the carrying amount as of August 31, 2019, rounded down to
the nearest million yen.
(Note 2) “As a percentage of total assets” is rounded to one decimal place.

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23

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019
ii.

Investment Assets
The following are the assets held by SANKEI REAL ESTATE (real estate or trust beneficiary rights that have real estate astrust assets; hereinafter, may be collectively referred to as the “portfolio assets”) as of August 31, 2019.

(A) Portfolio List
The property name, location, acquisition price, investment ratio, book value, appraisal value and acquisition date of theportfolio assets of SANKEI REAL ESTATE are as follows:

Asset
type

Officebuildings

Property
numberAcquisition price(Note 1)

Appraisalvalue(million yen)
(Note 3)Acquisition
date(Note 4)

Property nameLocation

A-1

Tokyo
Sankei Building(Note 5)

Chiyoda-ku,
Tokyo

2,509

5.8

2,591

2,680

Mar. 12,2019

A-2

BREEZÉ TOWER(Note 5)Kita-ku,
Osaka-shi,
Osaka

8,600

19.8

8,710

9,750

Mar. 12,2019

Chuo-ku,
Tokyo

6,698

15.4

6,779

7,380

Mar. 12,
2019

2,055

4.7

2,082

2,180

5,829

13.4

6,020

6,500

4,959

11.4

5,029

5,560

3,782

8.7

3,906

3,880

34,43479.4

35,11837,930

-

A-3

A-4
A-5
A-6
A-7

S-GATENIHONBASHIHONCHO(Note 5)S-GATEAKIHABARA
HibiyaSankei Building
Hatchobori
Sankei Building
Toyo Park Building

SubtotalSub
assets

Book
value
Price
Investment ratio (million yen)
(Note 2)
(million yen)(%)-

Mar. 12,2019Mar. 12,2019Mar. 12,2019Mar. 12,2019

Chuo-ku,
Tokyo

8,961

20.6

9,085

9,070

Mar. 12,2019

Subtotal

-

8,961

20.6

9,085

9,070

-

Total

-

43,395100.0

44,20347,000-

B-1

Hotel Intergate
Tokyo Kyobashi

Chiyoda-ku,
Tokyo
Chiyoda-ku,
Tokyo
Chuo-ku,Tokyo
Koto-ku,Tokyo(Note 1) “Acquisition price” is the sale and purchase price of real estate and each trust beneficiary right stated in each sale and purchase agreement for the
portfolio assets, rounded down to the nearest million yen. The sale and purchase prices do not include consumption tax, local consumption tax andthe various expenses required for the acquisition. “Investment ratio” is the proportion of the acquisition price of each portfolio asset to the sum total
amount of acquisition prices, rounded to one decimal place.
(Note 2) “Book value” is the depreciated book value for each portfolio asset as of August 31, 2019, rounded down to the nearest million yen.
(Note 3) “Appraisal value” is the appraisal value with an appraisal date of August 31, 2019, stated in each real estate appraisal report. The appraisal of eachportfolio asset is entrusted to Japan Real Estate Institute, The Tanizawa Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd.
(Note 4) “Acquisition date” is the acquisition date stated in each sale and purchase agreement for the portfolio assets.
(Note 5) The acquisition price, book value and appraisal value for “Tokyo Sankei Building” and “S-GATE NIHONBASHI-HONCHO” are the figures equivalent tothe co-ownership interest in each property (2% and 51%, respectively) (*1) held by SANKEI REAL ESTATE. The acquisition price, book value andappraisal value for “BREEZÉ TOWER” are the figures equivalent to the 30% quasi co-ownership interest in sectional ownership of the office portion of
the building, etc. (*2) held by SANKEI REAL ESTATE.
(*1) As for “Tokyo Sankei Building,” SANKEI REAL ESTATE acquired 2% co-ownership interest in the ownership of the site, 2% quasi co-ownershipinterest in the leasehold and 2% co-ownership interest in the ownership of the building. As for “S-GATE NIHONBASHI-HONCHO,” SANKEI REALESTATE holds trust beneficiary rights with 51% co-ownership interest in the ownership of the site and building as trust assets.
(*2) As for “BREEZÉ TOWER,” SANKEI REAL ESTATE holds 30% quasi co-ownership interest in trust beneficiary rights with sectional ownership of theoffice portion of the building and rights to use the site (ownership, leasehold and mutual use rights of the site) as trust assets.

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24

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(B) Overview of Buildings and Leasing
The property name, construction completion, total rental revenue, security and guarantee deposits, total leasable area,
total leased area and occupancy rate of the portfolio assets of SANKEI REAL ESTATE are as follows:
Asset
type

Total
rentalrevenue(million yen)
(Note 2)

Security andguarantee
deposits(million yen)
(Note 3)

Sept. 28,
2000

99

90

881.69877.20

99.5

July 1,
2008

582

476

8,097.34

8,097.34

100.0

Oct. 31,
2018

307

307

3,171.83

3,171.83

100.0

111

111

1,681.55

1,681.55

100.0

386

321

3,439.61

3,439.61

100.0

306

252

5,594.90

5,594.90

100.0

205

168

4,224.52

4,224.52

100.0

-

1,998

1,726

27,091.45

27,086.96

100.0

Jan. 18,
2018

413

206

6,006.53

6,006.53

100.0

Subtotal (Average)

-

413

206

6,006.53

6,006.53

100.0

Total (Average)

-

2,412

1,933

33,097.98

33,093.49

100.0

Property
number

A-1
A-2

A-3
Officebuildings
A-4
A-5
A-6
A-7

Property nameTokyo
Sankei Building(Note 7)BREEZÉ TOWER(Note 7)
S-GATENIHONBASHIHONCHO(Note 7)
S-GATEAKIHABARA
HibiyaSankei Building
Hatchobori
Sankei Building
Toyo Park Building

Subtotal (Average)Sub
assetsB-1

Hotel Intergate
Tokyo Kyobashi

Construction
completion(Note 1)

Sept. 29,2017
June 25,
1992
Sept. 1,
1965
June 18,
1991

Total
leasablearea(m2)(Note 4)

Total
leasedarea(m2)(Note 5)

Occupancy
rate(%)(Note 6)(Note 1) “Construction completion” is the date of new construction completion stated in the registry of the main building for each portfolio asset. If there are
multiple main buildings, the date of the oldest building stated in the registry is indicated.
(Note 2) “Total rental revenue” is the amount calculated by annualizing the monthly rent (Only the rent for the rental accommodation, excluding usage fees forwarehouses, signboards, parking lots, etc., but including common service charges. Free rent and rent holiday (*1) will not be taken into consideration.
Consumption tax, etc. are not included. The same shall apply hereinafter.) for the building stated in the lease agreement for each portfolio asset
effective as of August 31, 2019, rounded down to the nearest million yen. The amount calculated by annualizing the monthly rent stated in the leaseagreement concluded with the end tenant with respect to the portion in the pass-through-type master lease agreement (*2) is indicated when a passthrough-type master lease agreement has been concluded for the portfolio assets.
(*1) “Free rent” refers to measures temporarily reducing rent or other amount for mainly tenants newly moving in that temporarily reduce costs
associated with moving so as to encourage them to move in. “Rent holiday” refers to an agreement on measures temporarily reducing rent orother amount on a regular or irregular basis for a certain period of time during a tenant’s period of occupancy. The same shall apply hereinafter.
Unless otherwise stated, calculations are made without taking free rent or rent holiday into consideration when calculating monthly rent, etc. inthis document.
(*2) “Pass-through-type master lease agreement” refers to master lease agreements that have no rent guarantee.
(Note 3) “Security and guarantee deposits” is the total amount of security and guarantee deposits (including the amount expected to be received based oneach lease agreement, but excluding security and guarantee deposits for warehouses, signboards, parking lots, etc.) based on the lease agreement foreach portfolio asset as of August 31, 2019, rounded down to the nearest million yen.
(Note 4) “Total leasable area” is the area (excluding area of warehouse, signboard, parking lot, etc.) expected to be leasable based on the lease agreement,
drawing, etc. of the buildings for each portfolio asset as of August 31, 2019, rounded to two decimal places.
(Note 5) “Total leased area” is the total leased area (excluding area of warehouse, signboard, parking lot, etc.) stated in the lease agreement (excluding leased
agreements under which the lease period is yet to commence) for each portfolio asset as of August 31, 2019, rounded down to two decimal places.
With respect to the portion which comes under the pass-through-type master lease agreement, the total area for which the lease agreement has
actually been concluded with the end tenant and for which the lease period has commenced is indicated, rounded down to two decimal places.
(Note 6) “Occupancy rate” is the ratio of total leased area to total leasable area for each portfolio asset as of August 31, 2019, rounded to one decimal place. In
addition, each subtotal and portfolio total figure is the ratio of the sum total of total leased area to the sum total of total leasable area for eachportfolio asset, rounded to one decimal place.
(Note 7) The total rental revenue, security and guarantee deposits, total leasable area and total leased area for “Tokyo Sankei Building” and “S-GATENIHONBASHI-HONCHO” are the figures equivalent to the co-ownership interest in each property (2% and 51%, respectively) held by SANKEI REALESTATE. The total rental revenue, security and guarantee deposits, total leasable area and total leased area for “BREEZÉ TOWER” are the figuresequivalent to the 30% quasi co-ownership interest in sectional ownership of the office portion of the building, etc. held by SANKEI REAL ESTATE.

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25

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(C) Overview of Real Estate Appraisal Reports
The following is an overview of each real estate appraisal report prepared by Japan Real Estate Institute, The Tanizawa
Sōgō Appraisal Co., Ltd. and Daiwa Real Estate Appraisal Co., Ltd. upon being entrusted by SANKEI REAL ESTATE and theAsset Management Company with the appraisal of the portfolio assets of SANKEI REAL ESTATE. The concerned realestate appraisal reports are the appraising appraisal company’s judgment and opinion at a certain point in time, and are
not a guarantee of the validity or accuracy of the content thereof, possibility of transaction at the concerned appraisal
value, etc. Furthermore, there is no special vested interest between Japan Real Estate Institute, The Tanizawa Sōgō
Appraisal Co., Ltd. or Daiwa Real Estate Appraisal Co., Ltd. and SANKEI REAL ESTATE or the Asset Management Company.
Overview of appraisal report

Asset
type

Officebuildings

Property
number

Property nameAppraiser

A-1

Tokyo
Sankei Building(Note 2)

A-2

BREEZÉ TOWER(Note 2)

Japan
Real Estate
Institute
Japan
Real Estate
Institute

A-3

S-GATENIHONBASHIHONCHO(Note 2)A-4

S-GATEAKIHABARA

A-5

HibiyaSankei Building

A-6

Hatchobori
Sankei Building

A-7

Toyo Park Building

2,680

2,710

2.6

2,640

2.3

2.7

2,710

9,750

9,840

3.9

9,660

3.5

4.1

9,330

7,380

7,420

3.4

7,330

3.0

3.5

6,650

2,180

2,220

3.6

2,140

3.4

3.8

2,010

6,500

6,650

3.1

6,350

2.9

3.3

6,970

5,560

5,660

4.1

5,520

4.2

4.3

5,430

3,880

3,960

4.1

3,800

3.9

4.3

2,780

37,93038,460-37,440--35,880

9,070

9,210

3.8

9,010

3.6

4.0

9,290

Subtotal

9,070

9,210

-

9,010

-

-

9,290

Total

47,00047,670-46,450--45,170Japan
Real Estate
Institute
Japan
Real Estate
Institute
Japan
Real Estate
Institute
The Tanizawa
Sōgō Appraisal
Co., Ltd.
Japan
Real Estate
Institute

SubtotalSub
assetsB-1

Direct capitalization
DCF
Appraisal
methodmethodIndicatedvalue
value by
Indicated
Indicated(million
costvalue byvalue byDiscount Terminal
yen)
approachincome Cap rate income
rate
cap rate(Note 1) approach(million(%)
approach
(%)
(%)
yen)
(million(millionyen)
yen)Hotel Intergate
Tokyo Kyobashi

Daiwa
Real EstateAppraisal
Co., Ltd.

(Note 1) The date of value is August 31, 2019.
(Note 2) The appraisal value, indicated value by income approach based on direct capitalization method, indicated value by income approach based on DCF
method and indicated value by cost approach for “Tokyo Sankei Building” and “S-GATE NIHONBASHI-HONCHO” are the figures equivalent to the coownership interest in each property (2% and 51%, respectively) held by SANKEI REAL ESTATE. The appraisal value, indicated value by income approachbased on direct capitalization method and capitalization rate, indicated value by income approach based on DCF method, discount rate and terminal
capitalization rate, and indicated value by cost approach for “BREEZÉ TOWER” are the figures equivalent to the 30% quasi co-ownership interest in
sectional ownership of the office portion of the building, etc. held by SANKEI REAL ESTATE.

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26

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SANKEI REAL ESTATE Inc. (2972) Financial Report for the Fiscal Period Ended August 2019(2) Capital Expendituresi.

Schedule of Capital Expenditures
Of capital expenditures associated with renovation work, etc. currently planned for assets held by SANKEI REAL ESTATE as
of August 31, 2019, the following are the major estimated amounts (10 million yen or more). The estimated construction
costs below include the portion separately charged to expenses in accounting.
Estimated construction costs(million yen)

Name of real estate, etc.

Purpose(Location)

Hatchobori Sankei Building(Chuo-ku, Tokyo)ii.

Scheduled period

Fresh air handling unit andcooling tower parts replacement

From: Nov. 1, 2019
To: Nov. 23, 2019

Total
amount30

Amount of

Total

payment
duringamountalready

periodpaid--

Capital Expenditures during the Fiscal Period
No major construction work falling under the category of capital expenditures of 10 million yen or more was conductedin the fiscal period under review for assets held by SANKEI REAL ESTATE as of August 31, 2019. For the fiscal period underreview, capital expenditures amounted to 25,262 thousand yen and repair expenses separately charged to expenses
amounted to 10,663 thousand yen for a combined total of 35,925 thousand yen of construction work implemented.

iii.

Cash Reserves for Long-Term Repair Plans
Based on long-term repair plans formulated on a property-by-property basis, SANKEI REAL ESTATE makes the following
provision of reserve for repairs from cash flows during the fiscal period for the purpose of allocating to medium- to longterm future large-scale repairs and other funds.
(Unit: thousand yen)
1st fiscal period
From: Nov. 19, 2018
Fiscal period
To:
Aug. 31, 2019

Balance of reserve at beginning of period-

Provision of reserve during period

95,103

Reversal of reserve during period-

Reserve carried forward

95,103-27-